The stock market took a beating Tuesday after the CEO of AT&T ( T) stirred up recession fears among investors. The Dow closed down 238 points and the Nasdaq finished down 58 points. The crew at CNBC's "Fast Money" worked on getting defensive names for investors to trade. The show also looked at gold and the strong run the drugs stocks have enjoyed.In Karen Finerman's opinion, the market is a little bit scary here. According to Pete Najarian, now is the time to get defensive and be in drug names and not financials. Guy Adami also likes defensive plays like Altria Group ( MO) and Johnson & Johnson ( JNJ). Jeff Macke reminded viewers that the stock market remains sick. (Here's a look at a defensive portfolio on Stockpickr.com Defensive-Secular-DIV paying.)
Gartman and GoldGold continues to soar - trading up to an all-time high of $880.30 as the dollar continues to slide. Adami cautioned viewers not to confuse being long Newmont Mining ( NEM) with being long gold. He thinks Freeport-McMoRan Copper & Gold ( FCX) is a better buy then NEM because it trades at a cheaper valuation. Najarian mentioned that the money is flowing into the upside call options on the mining stocks. He likes the gold mining stocks far better then the streetTRACKS Gold Trust ( GLD). Dennis Gartman author of The Gartman Letter joined the "Fast Money" crew to discuss his take the commodities markets. Gartman thinks it's a little late to put a position on in gold. He disclosed that he sold a little bit of gold on Tuesday late in the day off the panic in the markets. Gartman also mentioned that he covered some short positions as the panic broke out in the stock market. He still thinks we're in a real bear market with a lot farther to go on the downside.
Defensive DrugsDrug stocks put in another strong day on Tuesday with names like Amgen ( AMGN) and Wyeth ( WYE) showing strength. Macke explained that investors are playing defense with names like Merck ( MRK). Finerman says she loves DaVita ( DVA) for a safe haven play. Najarian says his favorite drug stock right now is Eli Lilly ( LLY). He also likes Pfizer ( PFE) which he noted trades at a P/E of 10. Adami likes Gilead Sciences ( GILD) and GlaxoSmithKline ( GSK).
Emerging Market TradeEmerging markets displayed strength on Tuesday as the U.S. markets plunged. Tim Seymour joined the "Fast Money" crew to discuss his take on the emerging markets. Seymour explained that countries that have higher growth and lower interest rates are outperforming and are better insulated. He gave examples of this with China, Russia, Malaysia, Taiwan and Chile. Seymour mentioned he likes the media stocks like Net Servicos de Comunicacao ( NETC), Central European Media Enterprises ( CETV) and CTC Media ( CTCM) because these are plays that are exposed to domestic growth. He also likes Petrobras for a play on emerging markets. Adami thinks a trade is setting up in China Mobile ( CHL) with a stop at $80 and a target of $100.
CES TradeWhat are the best stocks to play off this week's Consumer Electronics Show? CNBC Silicon Valley Bureau Chief Jim Goldman joined the "Fast Money" crew to discuss his take on some technology stocks. Goldman says watch for Intel's ( INTC) push into a new line of processors that are geared towards Mobile Internet Devices "MIDs." Intel's new line of processors could add billions in new revenue to the chip giant's bottom line. Najarian mentioned he would hold back from mobile device names like Research In Motion ( RIMM) right now. Goldman thinks RIMM has some catching up to do with the new trends in wireless devices. He mentioned that Microsoft ( MSFT) has a high priority in making sure that mobile devices are running its software platform. Macke likes Microsoft but he doesn't see it as a buy off of this push into mobile software.
Monorail DemiseSpeculation swirled around Wall Street Tuesday that the municipal bonds backed by the Las Vegas Monorail could default. This would be disastrous news for bond insurer Ambac ( ABK). Finerman thinks there could be a lot of defaults which would lead to a high number of claims against the bond insurers. She explained that this could lead back to the investment banks that securitized the loans. Finerman thinks the trade here is to short Lehman Brothers Holdings ( LEH). Najarian disclosed that he has a short position in Washington Mutual ( WM).
More CEO NewsBear Stearns ( BSC) trades 6% lower after the CEO James Cayne said he was leaving the investment banking giant. Finerman thinks there's more bad news to come at BSC. AT&T traded down 4.5% after the CEO made some bearish comments about the telecom giant's consumer business. Adami thinks AT&T is a buy at $37.50. Najarian says this is a great opportunity to buy AT&T off of the panic sell in the shares. He disclosed that he will be looking to buy the stock tomorrow morning if nothing else changes. Starbucks ( SBUX) rips 8% higher after the former CEO Howard Shultz says he is returning to the coffee company. Macke thinks the short trade is over in SBUX and it's time to build a long position.
POPS&DROPSPops - Circuit City ( CC) traded up 2% after the company said December sales fell 9%. Macke maintains that CC is the worst company on earth. Websense ( WBSN) traded up 9% after the software company reported its fourth-quarter revenues should beat Wall Street expectations. Najarian doesn't think the pop will last long considering current stock market conditions. Great Atlantic and Pacific Tea ( GAP) traded up 2% after the company reported higher third-quarter earnings. Macke's comment was "people have to eat". Crocs ( CROX) traded up 7%. Finerman thinks the stock is just rebounding from being overdone on the downside.
Face2FaceViewers like to have their own questions answered. Rob writes, "What single play is considered the most defensive by each on your panel?" Najarian picked MacDonald's ( MCD). Finerman likes Altria Group ( MO).
Final TradeThe team signs off with their favorite trade ideas of the day.
- Macke advises investors to short the Dow with Short Dow30 ProShares (DOG), if you absolutely have to be in the market.
- Adami thinks the selling in AT&T (T)is overdone.
- Finerman recommends buying SPDR Trust (SPY) and shorting iShares Russell 2000 Index (IWM).
- Najarian suggests owning puts in Countrywide Financial (CFC) because it's going lower.